Tuesday, November 24, 2015

Why Extended Warranties are a Scam

Millions
of people will head to stores on busiest shopping
day of the year. Many of them will return home as victims of a scam.
Forget calling the police, they can't do anything about it, as the
con you and millions of others have fallen for was perfectly legal.
So what is this con job being legally perpetrated against Americans
all over the country? Two words: extended warranties.

Extended
warranties are undeniably good for two parties: the retailer and the
salesman. The retailer gets more money. The salesman gets an extra
commission. These are the reasons stores and salesmen push extended
warranties for cameras and other electronic devices so much. They
want their money first thing, any concern for you probably comes in a
distant second. Extended warranties give stores and salesmen money,
and consumers a lighter wallet. So why are extended warranties a con
job?

Extended
warranties are a scam because, chances are, you'll never need them.
Manufacturers offer full warranties for their products, provided
they're factory sealed and have entered the country of destination
via the designated courier. Obviously, gray
market and refurbished items
don't get a manufacturer's warranty. The lower cost comes at a price.
Back onto warranties. The manufacturer's warranty will normally cover
any repairs needed because of “normal wear and tear” within a
given time frame from the date of purchase. The good news is that
things as complex as today's electronics, if faulty, will probably
break within a year, if not much sooner. Chances are, if your camera
works fine for a year, it will keep right on working for a long time
to come.

Besides
cost consideration comes what the warranty will and will not cover.
Most extended warranties will only cover repairs from “normal wear
and tear,” which leaves a lot of room for interpretation. Companies
may brag about great customer service, but fixing a product at their
own expense costs the repair company money. Because of this, the
company may refuse to repair your equipment if, in their eyes, the
equipment shows signs of “abuse,” which could be as minor as
paint wearing off from regular usage or as major as being waterlogged
after being caught in a sudden rainstorm. Unless it is a warranty
that specifically covers accidental damage, almost anything can
warrant repair service being denied. The warranty company gets your
money and you get your broken camera back.

So,
when that salesperson offers you an extended warranty, think
carefully. Unless the warranty specifically covers accidental damage,
skip it. A much more encompassing alternative to an extended warranty
is insurance, which should protect against damage and even theft,
which no warranty will cover. Check with your home insurance company
to see if it is possible to get a rider policy for photo gear
attached to the main policy. Having done this myself and knowing
other people who have also done so, I can safely say that this is a
lot cheaper than any warranty and offers complete protection and
piece of mind that warranties don't.